Pryor Mountain Oil & Gas Co. v. Cross

• Decision Date: 05 February 1924
• Docket Number: 1062
• Parties: PRYOR MOUNTAIN OIL & GAS CO. v. CROSS
• Court: Wyoming Supreme Court

222 P. 570

31 Wyo. 9

PRYOR MOUNTAIN OIL & GAS CO. v. CROSS

No. 1062

Supreme Court of Wyoming

February 5, 1924

ERROR to District Court, Big Horn County, P. W. METZ, Judge.

Action by A. B. Cross against Pryor Mountain Oil & Gas Company to recover possession of land. There was a judgment for plaintiff and defendants bring error.

Affirmed.

E. E Enterline, Johnston, Coleman & Johnston for plaintiff in error.

Oil and gas leases are construed most strongly against the lessee Thornton, 3rd. Ed. 251; Archer L. P. 6; defendant in error is without title; the lease conveyed an interest to lessee Williamson v. Jones (W. Va.) 19 S.E. 436; Lawson v. Hirchner, (W. Va.) 40 S.E. 344; Wilson v. Yost, (W. Va.) 28 S.E. 781. An oil lease must be in writing, 4719 C. S., Thornton, 329. It conveys an interest in land, Beckett Co. v. Backer, 178 S.W. 1084; Ramage v. Wilson, 77 N.E. 368; Huff v. McCauley, 91 Am. Dec. 203; Entwhistle v. Henke, 71 N.E. 990; Heller v. Dailey, 63 N.E. 490; Mont. Co. v. Gibson, (Wyo.) 113 P. 784; it is within the statute of frauds, Smith v. Perkins, 24 S.W. 722; Kingsley v. Siebrecht, 42 A. 249; Chicago Co. v. Mach. Co., 31 N.E. 348; Benton v. Schulte, 17 N.W. 621. Defendant in error is estopped to deny lessee's interest, 10 R. C. L. 699, 21 C. J. 1226; Wilcoxson v. Burton, 27 Cal. 228. The lease terminated by failure to market gas within six months. Steelsmith v. Gartlan, 29 S.E. 978; Cyron v. Ridelsperger, 7 P. C. C. Rep. 473. Stipulations as to diligence are binding, Thornton 167. An oral agreement cannot alter terms of a written contract, 29 A. & E. Encl. 824; Emerson v. Slater, 22 How. 28; Swain v. Seamens, 9 Wall. 254; Blood v. Goodrich, 24 Am. Dec. 121. Lease renewals must be in writing, 4622 C. S.; time was of the essence though not specifically stated, Fetter Eq. 279; Garden City Co. v. Maseh, 109 P. 686; Brown v. Co., 9 S.Ct. 127; Thornton 163; Wilson v. Roots, 10 N.E. 204, 6 R. C. L. 285. The lease was subject to forfeiture, Howarton v. Co., 106 P. 47; Island Co. v. Combs, 53 N.E. 452; Gadbury v. Co., 67 N.E. 259; Petro. Co. v. Oliver, 79 S.W. 884; Shenandoah v. Hise, 23 S.E. 303; Petro. Co. v. Coal Co., 18 S.W. 65; Parish Co. v. Bridgewater Co., 42 S.E. 655. Notice of forfeiture was unnecessary, Maxwell v. Todd, 16 S.E. 926, estoppel cannot be based upon a promise as to the future, Eaton Eq. Jr. 171, Pom. Eq. Jr. 3rd Ed. 808, 16 Cyc. 756. One not knowing legal rights is not estopped to claim forfeiture, Parkey v. Ramsey, 76 S.W. 812; Biddle v. Co., 14 Cal. 279; Turnipseed v. Hudson, 19 Am. Dec. 18; Crabtree v. Bank, 67 S.W. 797; Brant v. Co., 93 U.S. 326, 10 R. C. L. 696. One setting up estoppel is bound to exercise reasonable diligence, Fourth Bank v. Co., 161 S.W. 1144; Pocahontas v. Browning, 44 S.E. 267, 21 C. J. 1129; one not relying upon silence, statement, acts or admissions cannot claim estoppel, Ford Co. v. Cress, 116 S.W. 710, 21 C. J. 1126; McCormick v. Co., 24 P. 1003; Huston v. Peterson, 87 P. 1074; Simmons v. Shaft, 138 P. 614; Pom Eq. 807; Brant v. Co., supra; Dye v. Crary, 85 P. 1038; Henshaw v. Bissell, 18 Wall. 255. The court erred in finding that plaintiffs had waived performance, Bennecke v. Co., 105 U.S. 355; In re Miller's Co., 106 N.W. 485, 29 A. & E. Encl. 1095. Waiver must be supported by a valuable consideration, 29 A. & E. Encl. 1097; 40 Cyc. 263. On the question of estoppel or of waiver, acts of officers of corporations control, 2 Thomp. Corp. 1183, 14-a C. J. 1844, 2 Cook 712, 7 R. C. L. 427; Hartford Co. v. Co., 45 N.W. 351; Trent v. Sherlock, 61 P. 650; Franklin v. Co., 141 P. 727. The president alone cannot act, 3 Thomp. 2459; Potts v. Wallace, 13 S.Ct. 196; Lewistown Co. v. Brown, 85 P. 47, nor the secretary, 8 Thomp. 1513, nor general managers, 3 Thomp. 2459, nor agents, except when acting within the scope of authority, Sanders v. Chartrand, 59 S.W. 95.

C. A. Zaring for defendant in error.

The evidence supports the finding that defendant in error owned the lease at the commencement of the action; plaintiffs in error waived a strict performance by their actions, declarations and conduct and are estopped from enforcing a forfeiture, the covenant to market gas within six months is not absolute, but is qualified by the terms of the lease itself, officers and directors of plaintiff in error were active in negotiations for the sale of the gas, but were unsuccessful; there was no notice of a claim of forfeiture; there was a waiver of strict performance as to marketing gas; no cases are cited involving forfeiture of a lease, containing covenants similar to the one in question; right to declare forfeiture must be strictly reserved, 18 R. C. L. 1813; Thompson v. Christie, 11 L. R. A. 236, 20 A. 934; Archer 752. The right to declare a forfeiture was not distinctly reserved; there was a waiver of strict performance, Westmoreland Co. v. Dewitt, 5 L. R. A. 731; Pyle v. Henderson, 65 W.Va. 39, 63 S.E. 762; Archer 548-549. Plaintiffs in error have not brought themselves within the rule governing forfeitures as announced in the foregoing cases; defendants did not exercise their rights promptly; an enforcement of the forfeiture of the lease in question would be unconscionable.

BLUME, Justice. POTTER, Ch. J., and KIMBALL, J., concur.

OPINION

BLUME, Justice.

A. B. Cross, defendant in error here, brought this action as plaintiff, against The Pryor Mountain Oil & Gas Company, a corporation, hereinafter referred to as the corporation or the lessor, and Ellen J. Sessions, B. A. Sessions and E. D. Sessions, plaintiffs in error here, to recover the possession of the SW 1/4 of the NW 1/4 of the NW 1/4 of Section 34, T 56 N. R. 97, for the purpose of producing and marketing gas therefrom; alleging that plaintiff was entitled to such possession by virtue of the lease hereinafter mentioned. Defendants answered, setting out said lease and alleging that it was executed by said corporation with the consent of the codefendants. The material parts of said lease are as follows:

"THIS INDENTURE OF LEASE, made and entered into this 4th day of June A. D. 1918, by and between THE PRYOR MOUNTAIN OIL AND GAS COMPANY, a corporation duly organized and existing under and by virtue of the laws of the State of Wyoming, party of the first part, and G. M. SMITH and L. B. JACKSON, doing business under the firm name and style of SMITH & JACKSON, a partnership, parties of the second part, WITNESSETH: --

That the party of the first part, for and in consideration of the sum of one dollar to it in hand paid by the party of the second part, receipt of which is acknowledged, and in further consideration of the covenants and conditions herein contained to be kept and performed by the parties of the second part, has granted, demised, leased and let, and by these presents does grant, demise lease and let unto the said parties of the second part, their heirs and assigns, for the sole and only purpose of drilling and operating for oil and gas, and of laying pipe lines, constructing tanks, buildings and other structures thereon to take care of the products therefrom, all that certain tract or parcel of land situate, lying and being in the County of Big Horn and State of Wyoming, and particularly described as follows, to-wit: --

The S 1/2 of the N 1/2 of the NW 1/4 of Sec. 34, Twp. 56 N. R. 97 west of the 6th P. M., containing 40 acres, more or less;

It is hereby agreed that this lease shall remain in full force and effect for a period until August 15-1918 from the date hereof, and as long thereafter as oil or gas or either of them is produced therefrom by the party of the second part, their heirs or assigns, and that should production be had from said premises that the parties of the second part shall market the product within six months from the date of discovery or at a time mutually agreed upon by both the party of the first part and the parties of the second part.

No alteration or extension of this agreement shall be binding unless in writing and signed by the parties hereto.

All covenants and conditions hereof shall extend to and be binding upon the successors, heirs and assigns of the parties."

Defendants alleged that said lessees discovered gas in paying quantities before August 15, 1918, but that they wholly failed to market said gas within the time specified in said agreement, or at any time, and by reason of other wells being operated in the vicinity, the gas from the gas well brought in by lessees was being drained. Defendants asked that the title to said premises be quieted in them. The plaintiff replied that said lessees attempted with due diligence to find a market for said gas but was unable to do; that about September 1, 1918, said lessees gave to the said corporation, lessor, the privilege to market said gas at such price as lessor might deem proper and account for the proceeds in accordance with the terms of the lease; that lessor thereafter entered into negotiations with various parties for the sale of said gas and the purchase of the leasehold interest, but was unable to dispose of same; that on May 18, 1920, plaintiff purchased from Wise & Jackson, successors in interest of Smith & Jackson, the rights of said lessees without notice of any adverse claim of defendants, and was then ready, able and willing to market the gas from said well at a fair valuation. The case was tried to the court without the intervention of a jury, judgment was rendered for plaintiff, a motion for a new trial was filed and overruled, and defendants bring this case here by proceedings in error.

1. The original lease was made by said corporation with G. M. Smith and L. B. Jackson, a partnership doing business as Smith &amp Jackson. W. A. Wise testified that in fact five parties were interested in the lease, as lessees,...